Walmart (NYSE:WMT) released its fiscal second-quarter results on Thursday, delivering a mixed performance. While sales outpaced forecasts, profits disappointed, marking the first earnings miss in three years.
In pre-market trading on August 21, the stock slipped 3.1%, even as the retailer lifted its full-year guidance.
Results
Adjusted earnings per share came in at $0.68, falling short of the $0.74 expected by analysts surveyed by LSEG. Management attributed the earnings shortfall to higher restructuring costs, legal expenses, and rising insurance claims. Despite this, net income rose sharply to $7.03 billion, compared with $4.50 billion in the prior-year quarter.
Revenue painted a stronger picture: total sales reached $177.4 billion, ahead of the $176.1 billion consensus forecast. In the U.S., comparable sales excluding fuel climbed 4.6%, topping analyst expectations of 4%.
Sam’s Club performed even better, posting 5.9% comparable sales growth. E-commerce continued to be a major driver, with online sales advancing 25% worldwide and 26% in the U.S.. Demand for fast delivery surged, with grocery and general merchandise orders rising almost 50% domestically. Advertising also stood out: Walmart Connect’s U.S. digital ads expanded 31%, while global advertising revenue advanced 46%.
Outlook
The retail giant raised its full-year sales and earnings outlook. Net sales are now projected to grow between 3.75% and 4.75%, up from the prior estimate of 3% to 4%. Adjusted earnings per share are expected to land between $2.52 and $2.62, slightly above the earlier guidance.
Costs and consumer behavior
Executives noted that Walmart continues to capture shoppers across a wide range of income levels, including higher-income households, despite inflation and tariff-related headwinds. The number of transactions increased 1.5%, while the average basket size rose 3.1%.
CFO John David Rainey explained that Walmart absorbed some tariff-related expenses in certain categories but passed on cost increases in others. He added that inflation had a relatively modest impact, with U.S. prices up about 1% in the quarter, though he expects costs to keep rising through the rest of the year.
Competitors
Industry peers delivered contrasting results. Target (NYSE:TGT) reported another decline in sales, while Home Depot (NYSE:HD) saw improvement in smaller home improvement projects, highlighting diverging consumer spending patterns.
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